Atlas Material Testing Technology LLC v. XPO Logistics Freight, Inc.

          OPINION ON TRANSFER

          Lynn N. Hughes United States District Judge

          1. Background.

         This is a dispute about damaged goods. The buyer sent the seller a tool that the seller damaged in its warehouse. The seller erred by asking the buyer for a replacement.

         Electronics for Imaging, Inc., bought a weather instrument - G4000 Weather-Ometer - from Atlas Material Testing Technology, LLC. Atlas sent Imaging a quote in July 2014. Peter Benoit, who works for Imaging, responded with a purchase order. Atlas sent the tool in November.

         Imaging hired XPO Logistics Freight, Inc. - known as Con-Way - to ship the tool from Atlas's plant in Chicago to Imaging's warehouse in New Hampshire. The tool had a tip indicator put on it.

         On November 11, 2014, Imaging noted that the indicator had not been triggered when the tool arrived; however, the next day, someone at Imaging noticed it had been. Imaging told Atlas about this and moved the tool into its warehouse in early December. Later that month, Atlas and Benoit met at Imaging's warehouse and decided the tool was damaged beyond repair. Imaging returned it to Atlas, and Atlas replaced it. Atlas's insurance paid Imaging for the damaged tool, and Imaging paid for the second tool by January 30, 2015.

         Atlas is an Illinois corporation. Imaging is a Delaware corporation with its principal place of business in Fremont, California. Imaging does not have an office, subsidiaries, telephone listings, mailing listings, bank accounts, or other property in Texas. Benoit works from his home in Austin, Texas. Con-Way is a Delaware corporation with several offices in Houston, Texas.

         Atlas brings a claim under three theories: (a) breach of contract, (b) breach of bailment, and (c) recoupment.

         2. Forum Selection Clause.

         The parties tried but did not include a forum selection clause in their contract. Atlas's offer is conditioned on Imaging accepting that Pennsylvania law governs their agreement. Imaging's acceptance is conditioned on Atlas accepting that California law governs their agreement. The parties' writings do not form a contract, but their conduct does.^[1] Atlas shipped the tool. Imaging paid for it. The contract's terms are only what the parties agreed to plus terms in state laws.

         Imaging asks the court to enforce the forum selection clause in its terms and to transfer the case to California. The forum selection clause does not apply because it is canceled by Atlas's. The action was brought in a Texas federal court, so Texas choice of law rules apply.^[2] Texas follows the Restatement (Second) Choice of Laws.^[3] Because the parties' contract does not cover choice of law, the law of the state with the most significant relationship to the transaction applies. New Hampshire is the state with the most significant relationship. The tool was either damaged in Imaging's warehouse or it was not. New Hampshire has adopted article two of the Uniform Commercial Code.^[4]New Hampshire's laws do not provide a forum selection clause in a contract where there is not one. If Texas, California, Pennsylvania, or Illinois law applied, the result would be the same.

         Because the forum selection clause does not apply, Imaging asks the court to transfer the case to the Northern District of Illinois or District of New Hampshire.

         3. Transfer.

         A California company with a guy in Texas ordered a tool to be sent to its New Hampshire warehouse. The forum selection clauses cancel, and the state with the greatest interest is New Hampshire. This is where the parties contracted to ship the tool and where any damage occurred. The action will be ...